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Customs officers of Ho Chi Minh City Customs Department inspect raw materials imported via Cat Lai Port. Photo: T.H

Incompliance with regulations

Many preferential policies on customs procedureshave been issued to facilitate export production and processing, especially, the Customs Law that provides regulations to create favorable conditions on customs procedures for this regime.

At the same time, the Law on Import-Export Duty provides tax exemption for raw materials and supplies imported for export instead of the 275-day tax extension as before.

However, in addition to compliant enterprises, some enterprises producing and processing for export have abused tax incentive policies to implement tax evasion, causing state revenue loss, have been detected and collected tens of billions of VND of tax arrears by Ho Chi Minh City Customs Department.

Recently, inspecting the export production and processing of the G.P Garment Joint Stock Company (Ho Chi Minh City), Ho Chi Minh City Customs Department discovered that this company imported goods for export production but did not directly produce goods and transferred a part or all imported goods to othercompanies to process and then receivedproducts for export. This act violates regulations and fails to meet the basis for determining goods eligible for tax exemption under Article 12 of Decree 134/2016/ ND-CP.

At the same time, the company did not archiveall documents and records related to exported and imported goods under the regime of export production and processing. Ho Chi Minh City Customs Department has finedand collected tax arrears of nearly VND50 billion for this company.

Earlier, in February 2020, through post-clearance audit, Ho Chi Minh City Customs Department made a record for V.C Wine Production Company Limited (District 6, Ho Chi Minh City) for the act of failing to comply with regulations on management on raw materials and supplies imported for export to foreign traders, leading to the difference of raw materials between inventory data and those in the customs declaration dossier. The department has collected and fined over VND420 million of tax.

There have not only been violations in export production and processing, but the incompliance with the provisions and tax fraud has occurredin processed goods.

Through post clearance audit for processing contracts of N.M Steel Manufacturing and Trading Joint Stock Company (BinhChanh, Ho Chi Minh City), Ho Chi Minh City Customs Department has found that this company has not abided by regulations on management of raw materials and supplies imported for export to foreign traders, leading to the difference of raw materials between inventory data and those in the customs declaration dossier. The department has collected and fined over VND300 million.

Having tax debt and vacating

Notably, the large amount of tax debt at Ho Chi Minh City Customs Department is mainly from tax assessment for regimesof export production and processing because businesses areno longer operating or vacated from the registered business address many years ago.

Topping the list of import and export tax debt is NIVL Joint Stock Company (Ben Luc district, Long An province, headed by Mr. A Nanda Kumar).

By the end of April 2020, this company owes over VND152 billion of tax. The tax debts are under three import declarations according to the regime of export production and processing and arose at Ho Chi Minh City Customs Department since 2013, including import taxes and customs fees. According to the Ho Chi Minh City Customs Department, this company has suspended operation for many years and the company owner returned to his country and left a huge debt to the state budget.

Another company, Silver Star Vietnam Co., Ltd. (Binh Tan District, Ho Chi Minh City) has a tax debt of more than VND47 billion. This tax debt has stemmed from 376 import customs declarations under the regime of processing investment, processing import and arose in 2007 and 2008. According toCustoms news research, this company was licensed in 2008 and specialized in manufacturing shoes. The company has suspended operation since 2011 but has not yet completed procedures to close the tax code.

Similarly, Neocacse Inc Vietnam Co., Ltd has a tax debt of nearly VND30 billion. In 2012 and 2013, this company opened more than 540 customs declarations to import goods under the regime of processing investment and processing import. This debt includes import-export taxes and customs fees arising from these customs declarations.

In addition, there are also some companies with large debts, such as: Karos Company (District 2, Ho Chi Minh City) owes nearly VND21 billion; Vina HaengWoon Industry Co., Ltd owes more than VND21 billion; World Fashion Sepplus Vietnam Co.,Ltd owes over VND19 billion.

According to the Ho Chi Minh City Customs Department, these bad debts mainly arose many years ago, so far they cannot be collected. The reason is that tax debtors are no longer operating at the registered business address and their owners have also returnedto their countries.

In addition to creating favorable conditions for compliant enterprises, Ho Chi Minh City Customs Department is also promoting the inspection, especially post-clearance audit, to promptly detect and strictly handle violations.